August 16, 2001

Robert Post, Ph.D.
U.S. Department of Agriculture
Food Safety and Inspection Service
Room 112, Cotton Annex
300 12th Street, S.W.
Washington, D.C. 20250-3700

     Re: Labeling of Natural or Regenerated Collagen Sausage
Casings

Dear Dr. Post:

The Small Business Administration's Office of Advocacy would
like to provide you with its position concerning the FSIS's
final rule on the labeling of natural or regenerated
collagen sausage casings.(1)

The Office of the Chief Counsel for Advocacy of the U.S.
Small Business Administration was created in 1976 to
represent the views and interests of small business in
Federal policy making activities.   The Chief Counsel  (1)
participates in rulemakings when necessary to ensure proper
representation of small business interests;  (2) reports to
Congress annually on Federal agency compliance with the
Regulatory Flexibility Act (RFA); and (3) works with federal
agencies to ensure that their rulemakings reflect the
results of an analysis of the impact that their decisions
will have on small businesses.

It is the Office of Advocacy's position that the FSIS has
failed to comply with the spirit and intent of the RFA in
connection with this rule.  Advocacy arrived at this
conclusion after reviewing the regulatory flexibility
analysis provided by the FSIS in accordance with 5 U.S.C.
sections 603 and 604, contained in both the proposed rule
and the final rule.(2)

The initial regulatory flexibility analysis contained in the
proposed rule failed to comply with 5 U.S.C. section 603.

Section 603 provides, inter alia, that the initial
regulatory flexibility analysis (IRFA) shall contain: a
description of and, where feasible, an estimate of the
number of small entities to which the proposed rule will
apply; a description of the projected reporting,
recordkeeping and other compliance requirements of the
proposed rule, including an estimate of the classes of small
entities which will be subject to the requirements and the
type of professional skills necessary for preparation of the
report or record; a description of any significant
alternatives to the proposed rule which accomplish the
stated objectives of applicable statutes and which minimize
any significant economic impact of the proposed rule on
small entities.

In the RFA section of the proposed rule, the FSIS admitted
that it "did not currently have all the data necessary for a
comprehensive analysis of the effects of this rule on small
entities."  FSIS then shifted the burden for determining
what, if any, adverse effects the proposed rule would have
on small entities by requesting public comment on the issue.
The FSIS further stated its belief that "associated labeling
costs would be low because manufacturers would be able to
defer the development of new labels until their existing
stocks of labels were exhausted."

In contravention of the RFA, FSIS failed to make a good
faith effort to obtain the required information for a
determination of whether the rule will have any adverse
effects on small entities.(3) The FSIS also failed to
provide any data and/or economic information to substantiate
its belief that any associated labeling costs would be
minimal.(4) Lastly, the FSIS failed to provide any
significant alternatives and/or exemptions that would
minimize any significant economic impact on small
entities.(5)

The final regulatory flexibility analysis (FRFA) contained
in the final rule failed to comply with 5 U.S.C. section
604.

The FSIS violated section 604 of the RFA, which contains
information on when a FRFA is required and provisions on
what should be contained therein.  This conclusion is
buttressed by the fact that the FSIS simply cut and pasted
the information contained in the proposed rule's IRFA and
placed it in the RFA section in the final rule.  To the
extent that the FSIS intended the information contained in
the RFA section of the final rule to serve as a FRFA, it
fell short of the requirements of section 604.(6) In large
measure the RFA section of the final rule fails to comply
with the RFA for the same reasons that the IRFA was
inadequate as contained in the proposed rule.  The FRFA
lacks information on: any public comments received in
response to the IRFA; a description of and an estimate of
the number of small entities to which the rule will apply; a
description of the reporting and recordkeeping requirements
of the rule; and a description of the steps taken to
minimize any significant economic impact on small entities.

Conclusion

Based on the foregoing, Advocacy suggests that the FSIS
postpone the effective date of the rule and reopen the
public comment period so that information on potential small
business impacts can be obtained.  Advocacy would also
suggest that the FSIS make a reasonable effort to obtain
information as to any potential impact that this rule may
have on small entities separate and apart from any public
comments received on the issue.

Thank you for your attention to the above matters.  If you
have any additional questions regarding Advocacy's position
on these issues, please do not hesitate to contact Linwood
Rayford, of my staff at (202) 401-6880.

Sincerely yours,

Susan M. Walthall
Acting Chief Counsel
Office of Advocacy

Linwood Rayford
Assistant Chief Counsel
Office of Advocacy

ENDNOTES

1.  66 FR 40843, August 6, 2001.
2.  The cite for the proposed rule is 62 FR 38220, July 17,
1997.
3.  See 5 U.S.C. 603(b)(3).
4.  See 5 U.S.C. 603(b)(4).
5.  See 5 U.S.C. 603(c).
6.  5 U.S.C. 604(a) requires an agency to prepare a FRFA
when the agency is required by law to publish a notice of
proposed rulemaking.